Page 45 - Insurance Surveyors Book Ebook IC S01

Survey And Loss Assessment IC-S01

Motor Insurance

Motor Insurance is a contract of Indemnity." Discuss

Ans. The principle of indemnity requires that when a loss arises under an

insurance policy, the loss must be made good in such a manner that financially the

insured is neither better off nor worse off as the result of the loss. The object

of this principle is to place the insured after a loss in the same pecuniary position

as far as possible as he occupied immediately before the loss.

The effect of this principle is to prevent the insured from making a profit out of a

loss. Motor Insurance contracts are contracts of indemnity. The principle is applied to

this insurance as under:

Total Loss - In total loss of the vehicle, insurers pay the market value of the vehicle at

the time of loss or the sum insured whichever is less. For total loss, market value

determined by an independent surveyor will be the basis.

For extensive damage which ultimately makes the repair uneconomical may be

considered for total loss to be derived by the independent surveyor. In such cases,

the insured, if wishes can retain the salvage and net amount can be disbursed

towards total settlement.

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